A report published by HSBC reveals that the Turkish economy has maintained its resilience despite the internal and external shocks it faced in 2025. The report projects that the Central Bank will implement a 150 basis point interest rate cut in December. With this reduction, the policy rate is expected to decline to 25.5 percent by the end of 2026.
The report estimates that inflation will fall to 20 percent by the end of 2026. However, it notes that price pressures may slow down due to strong domestic demand and high inflation expectations. The Central Bank's own inflation forecast has been announced as a range of 13-19 percent, with a midpoint of 16 percent.
HSBC emphasizes that keeping economic growth within the 3-4 percent range will be a priority for policymakers. The report also notes that uncertainties regarding foreign exchange policy persist, and that the CPI-based real effective exchange rate increased by 31 percent between June 2023 and December 2024, while remaining flat in 2025.
It is stated that political uncertainties and fiscal risks will continue to be significant risk factors in 2026. While the fact that the economic stability program has not gone off track in its third year is viewed positively by the markets, attention is drawn to the narrowing budget deficit. It is noted that the 12-month cumulative deficit has declined from 4.7 percent of GDP last year to 3.9 percent in October. The report states that the medium-term program does not signal fiscal tightening in 2026, and that credible fiscal consolidation and reforms are expected to remain in the background for the time being.
News Source: 12punto
